Weekly Market Recap – December 21st, 2018

In the Markets

Equity markets fell sharply last week, as the Dow Jones was down 6.9% and the S&P 500 dropped 7.1%. The NASDAQ posted the largest loss, nearing bear market territory for the tech-heavy index as its 8.4% decline this week marked a 20% drop from its peak. Chief among investors\\\’ concerns was the Fed\\\’s decision to execute the fourth interest rate increase of 2018, bringing short-term interest rates up to a range of 2.25-2.5%. Despite the recent market downturn, along with growing geopolitical concerns, Fed Chair Powell stuck to the data-driven approach, responding to broader economic conditions such as rising GDP, a tight labor market, and strong consumer sentiment as the Fed attempts to quell rising inflation. Meanwhile, the sell-off signals a fear amongst investors that the economy may not be able to handle the pace of interest rate increases with the increasing uncertainty in global trade.

Adding to the plethora of bearish factors this week was the threat of a government shutdown, which could add another obstacle to the major indices\\\’ recovery. This was exacerbated by the fact that it comes during the 90-day ceasefire in the U.S.-China trade tensions with no clarity on what will happen at its end. As whispers of a recession grew louder, eyes were on the yield curve as the gap between the long-term 10 year treasury note and the short-term 3 month treasury bill narrowed but did not invert. An inversion historically precedes an economic recession, so the lack of one at this time may prove to be a bullish indicator in the midst of this correction.

Crude oil continued to slide, as WTI futures dropped 11.42% and Brent fell 10.9%. This decline was echoed in oil products, as gasoline futures fell 9.18% on the week and heating oil lost 6.21%. Natural Gas, which has continued to display volatility in response to weather projections, managed to end its recent decline, up a modest 0.77% on the week.

Soybeans, grains, and softs saw losses across the board. Soybeans and corn dropped 1.75% and 1.62% respectively, while wheat futures fell 3.02% on the week. Sugar lost 2.45%, coffee was down 2.49%, and cotton plummeted 8.07%. Cocoa was the group’s only positive on the week, gaining 1.52%.

Gold managed to gain 1.35% as investors gravitated to the precious metal in the midst of the sell-off in other asset classes.

World Cup Trading Championships

As the WCTC enters the final stretch, Petra Ilona Zacek holds a commanding lead in the futures competition, closing the week with a 249.2% net return. Fabien Fischer finished the week in 2nd with a net return of 62.5%, followed by Adrian Koemel in 3rd at 57.4%. Jan Smolen made it back to the top 5 with a net return of 52.7%, while Ryan Anderson rounded out the leader board at 51.8%.

Trading futures and forex involves significant risk of loss and is not suitable for everyone. Past performance is not necessarily indicative of future results. World Cup Championship (WCC ) accounts do not necessarily represent all the trading accounts controlled by a given competitor. WCC competitors may control accounts that produce results substantially different than the results achieved in their WCC accounts. WCC entrants may trade more than one account in the competition.